Lady Ra-Ra's assistant wins the lottery and has an important decision to make about her winnings. It is better to
A) take a lump sum now because $1 today is worth more than $1 twenty years from now
B) take yearly payouts over 20 years so as to have a regular salary
C) leave it in the bank for 20 years to accumulate interest
D) none of the above

Question

Quizplus · Accepted Answer

Taking a lump sum now is the best choice because of the time value of money. The value of money decreases over time due to inflation, so it is better to take the money now while it has a higher value. Additionally, investing the lump sum can potentially result in greater returns than the yearly payouts or leaving it in the bank for 20 years. However, the decision ultimately depends on individual circumstances and financial goals.

Lady Ra-Ra's Assistant Wins the Lottery and Has an Important